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because now US$ dollar can buy more from Britain. Earlier $1.5 could get only 1 Pound
worth of goods from UK but now US importer have to pay only $1.3 to get 1 Pound worth
of goods from UK.
Customers will be happy but it might adversely affect the domestic industry as it will face
competition from cheaper imports from UK. Domestic businesses will find it difficult to sell
their products, will reduce output and cut jobs.
because now they will find it difficult to compete with other countries with comparatively
cheaper exchange rate. UK businesses will now think twice to buy from US because
earlier they could buy US$1.5 worth of good for £1, but now, they can only buy US$1.3
worth of goods due to appreciation in the value of US$.
Because of fewer exports, US business will reduce output, which will lead to
unemployment.
So the moral of the story is ‘Though it is nice to hear that the value of our currency has
appreciated but, in fact, it is not so nice for the economy’
Imports will become expensive. Products which use imported components will become
expensive. US tourists to UK will have to shell out more money for their vacation.
Consumers will feel the pinch and might be unhappy. BUT domestic producers will gain
as they will have a cost advantage over imported goods. Output will rise and so will
employment.
because UK businesses will prefer to buy from US. US exporters will become more
competitive in the International market due to cost advantage. As exports rise, more
goods will be produced and thus more jobs will be created.